There’s a new kid in town and it’s giving traditional ecommerce sites and Google Ads a major run for their money. It’s called social commerce and is anticipated to grow globally into a $1.2-trillion wave of change by 2025.
In South African terms, social commerce could account for some R5.7-billion in sales revenue this year alone, potentially rising to R21.2-billion in the next three*.
But what is it? Social commerce, in its simplest terms, refers firstly to brands who sell direct to the end consumer via a platform, secondly, influencers who are engaged by the brand to drive sales through followers and thirdly, individuals who sell through their own networks. Importantly, it is not a click through a social media ad to reach a brand site.
Over half of all South Africans use social media
While far from dead, an ecommerce-enabled website – which 67% of those polled for The 2022 South African Digital Customer Experience Report said they still use – is quietly being usurped by those (48%) who buy directly through Facebook and Instagram. Given around 30-million South Africans, or half of the population, use social media, the disruption that social commerce is causing is making many local brand custodians sit up and take notice.
What is most interesting about social commerce is that it’s giving the small guy a seat at the table again. For years, it has been big-box brands that have endless pots of budget for Google Ads and enticing websites that won the way into the consumers’ wallet. Now, the playing fields have been levelled and SMEs and established brands each have access to this new form of online purchasing due to its low barriers to entry and cost.
One cannot argue that social media is where shoppers now hang out. They are on their phones using social sites on average two and a half hours a day and is why brands, from upcoming SMEs and established names like Woolies and H&M are jumping at the social commerce opportunity.
While Facebook and Instagram dominate this new commercial goldmine, WhatsApp must not be forgotten and more and more brands are targeting their marketing to its users, as according to our report, 31% are using WhatsApp or other instant messaging platforms to shop online.
Customers’ reviews can make or break a sale
Social commerce aside, the other opportunity that has clearly come to light through our 2022 report is the impact of online reviews on shoppers’ perceptions and purchasing habits. Reviews are either housed on a brand’s own pages, or on third party sites like HelloPeter or TripAdvisor. They also exist on consumers’ own social channels who advocate for or lambast brands for good or bad experiences.
To put this into a financial context, 57% of our sample said that they tap into reviews on social media platforms, while 48% use third party platforms. Yet, most insightful was the fact that a full 63% of respondents said they referred to reviews and comments on ecommerce sites and that this significantly helped guide their shopping decisions. Extrapolated into rand terms, the value of reviews to South African e-commerce spend could be as high as R35.81-billion this year.**
Authentic trust is everything
There’s no secret sauce as to why this is: people trust other people. Consumers are far more likely to trust another person’s review, which is a true account of their purchase or experience, over a brand that can peacock itself. It is then essential that brands encourage customers to give them a review, but also that they ensure they offer exceptional service throughout the customer experience to garner that coveted gold star of endorsement.
Smart brands and marketers should be adjusting their products and customer experiences based on the analysis of reviews – and ensure that going forward the majority of personal accounts of their brand is a positive one.
Interesting, too few brands build substantive review libraries, and not every customer gives a review willingly. It helps to incentivise customers to post reviews – through a discount or competition element for instance – or investigate review syndication services. These typically aggregate verified product reviews from customers all over the world and share them with subscribing retailers.
Look to the future, not to the past
Coupled together, the growth in social commerce and the financial impact of reviews, can truly fuel a brand’s sales trajectory. It is thus imperative that big and small businesses investigate these channels and integrate them into their existing online platforms, or even leapfrog an ecommerce site altogether and simply start with social commerce.
Either way, the consumer has changed and is no longer playing in the same sandpit. Wise brands will have noticed and moved their attention to the future, instead of staying in the past.
Charlie Stewart is chief executive of Rogerwilco, the Financial Mail AdFocus 2021 Digital Agency of the Year. He has worked in the marketing industry for over 25 years. A Scot by birth, he began his career in London before moving to South Africa in the early 2000s. At Rogerwilco he takes a leadership role in crafting high impact ROI generating marketing interventions for the agency’s multinational clients. His book on marketing strategy, co-authored by Mark Eardley, was published by Penguin Random House in 2016. Stewart is CEO of Rogerwilco and co-author of the 2022 South African Digital Customer Experience Report
*To determine the potential social commerce figure we applied data from
Accenture’s report suggesting that, globally, social commerce accounted for
10% of all e-commerce transactions to Euromonitor’s R56.844bn evaluation of
the SA e-commerce market. Thus 10% of R56.844bn gave us the figure of
R5.684bn in 2022.
** Our calculation to determine the potential influence of reviews on
e-commerce transactions was derived from the 63% of respondents who told us
that they find them particularly helpful in guiding their shopping
decisions. This was multiplied by Euromonitor’s R56.844bn to arrive at a
figure of R35.8811bn this year.